She filed on June 28, the same day that she was due to respond to a fraud suit filed by Lehman that seeks to collect $17.8 million in connection with a Near South Side condominium project, Prairie House, which Lehman financed.

The filing in U.S. Bankruptcy Court in San Diego, near her home, marks an embarrassing chapter in a once-promising career.

Spathies' projects include such prominent developments as Tuxedo Park, a mid-1990s townhouse development in River North; the Chatham Club, a South Side single-family development; and the Residences at RiverBend, the riverfront luxury condominium tower completed two years ago.

But slow sales at RiverBend and then a financial bind on a second Near South Side project took its toll.

"She's a very competent developer, and a nice woman," said Gerry Fogelson, chairman and chief executive of Chicago-based Fogelson Properties Inc., where Spathies started her real estate career in 1976, rising to become president.

Spathies, the CEO of Chicago-based Bejco Development Corp., has built more than 600 homes, with projects totaling more than $250 million.

Yet in her bankruptcy petition, she says she has assets of less than $50,000 and debts of between $10 million and $50 million. The petition did not itemize her holdings or liabilities.

Lehman's lawsuit, filed in federal court in New York, alleges that nearly $3.7 million in deposits from home buyers was fraudulently diverted from the Prairie House project.

In December, Lehman took over the 187-unit project at 1501 S. Prairie Ave. after a default on a $9 million mezzanine loan from Lehman.

The complaint alleges that Spathies improperly used an unspecified amount of money from the Prairie House loan on a separate, nearby project, called Prairie Tower, which Spathies proposed but never built.

The alleged misappropriation triggered Spathies' personal guaranty of the entire loan, requiring her to pay $17.8 million, according to the complaint.

On Monday, a lawyer for Spathies who was handling the New York case declined to comment. The bankruptcy filing stays that case.

Lehman was also the mezzanine lender on RiverBend, Spathies' 37-story tower at Lake and Canal streets, where the Chicago River forks into north and south branches.

Lehman took back that project in September, after Spathies was unable to pay off two construction loans totaling $44.5 million. Lehman held an $11.7 million loan.

The bankruptcy filing and the Lehman lawsuit will not affect either Prairie House or RiverBend, said Atlanta developer Norman Radow, who now handles both projects for Lehman.

Earlier this year, Spathies sold the 161-unit Prairie Tower project to developer Gammonley Group for nearly $7 million.

Spathies is no longer involved in the project, which has been renamed Prairie Pointe, said DickGammonley, president of the La Grange firm, who expects to start construction later this year.

Meanwhile, Spathies has at least one last bit of unfinished legal business in Chicago: an unpaid $800,000 judgment against the limited liability company that developed Chatham Club.

The real estate arm of the former Canfield Beverage Co., which sold Spathies the land for the project, won the judgment in February after alleging a breach of contract.

Spathies is not named personally in the lawsuit, and her lawyers handling the case withdrew this year because of $57,000 in unpaid bills.